Lifetime Income Crucial to Farmers’ Retirement Security

A Joint Issue Brief by The American Corn Growers Association
and
Americans for Secure Retirement

Introduction

Farm and ranch operators and their workers ("farmers") face significant and unique obstacles in planning and providing for their retirement. They are less likely to be covered by traditional pensions, which make income payments for life, as well as other employer-sponsored retirement plans, as compared to workers in general. Extreme variability in farm income - due to fluctuations in commodity prices, weather, and macroeconomic policies, among other things - also makes it difficult for farmers to plan and save for retirement effectively.

For these reasons, many farmers today suffer the consequences of living long lives without adequate retirement income. Farm wives are particularly vulnerable to declining standards of living in retirement, because women tend to outlive men. Many have experienced this significant decline and a large number live only on monthly Social Security payments.

Farmers’ diminished independence and income ultimately affect the economic vitality of their communities, many of them some of the poorest in the nation, and strain already under-funded local governments. Indeed, the greatest concentrations of the elderly poor are in rural America. Farmers, and their families and communities, would benefit greatly from having better access to retirement vehicles, such as annuities, that make it easier to convert and manage their farm assets and personal savings so they last a lifetime.

As the Bush Administration and Congress consider sweeping changes to the nation’s retirement systems, it is imperative to the nation’s farm and ranch families that they address all of the elements of retirement security. For the nation’s rural and agricultural communities, retirement security goes far beyond addressing Social Security or pension reform - true retirement security will only come when we address both the savings accumulation side of the equation and the management of savings that would help individuals secure retirement income that lasts a lifetime.

Without addressing the latter, groups like farmers who don’t have as many options for generating regular retirement income will be left out in the cold. Retirement reform must include supporting policies that make annuities, the only retirement vehicle that provides a steady stream of income for life, more accessible. The Retirement Security for Life Act, legislation recently introduced in the House and Senate that would create a tax incentive for annuities that make regular payments for life, is an important first step toward reaching this goal.

Farmers represent the best of America. Their commitment to cultivating our land through hard work and dedication not only feeds, clothes, shelters and helps fuel our country, but supports an important part of our economy. It is a moral imperative to make sure farmers have the ability to have a secure retirement. It also makes for good public policy as the inability of retired farmers to fend for themselves will have an impact on the budgets of local communities and the federal government.

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